Did the administrative approval reform in China affect the productivity of energy firms? – A quasi-natural experimental approach

• Published in: Energy economics 2022-01, Vol.105, p.105564, Article 105564
• Main Authors: Zheng, Xuemei, Wu, Chengkuan, Nepal, Rabindra
• Format: Article
• Language: English
• Subjects: Administrative approval reform; China; Companies; Energy; Energy economics; Energy industry; Innovations; Outliers (statistics); Ownership; Productivity; Reforms; Resource allocation; Selfselection; Technological change
• ISSN: 0140-9883; 1873-6181
• DOI: 10.1016/j.eneco.2021.105564

This paper examines the impacts of China's administrative approval reform on the pro- ductivity of firms in the energy industry, using the establishment of the Administrative Approval Bureau (AAB) as a quasi-natural experiment. We apply event study strategy to exploit the dynamic treatment effects as the setting time of the AAB varies across cities. The findings show that the administrative approval reform has significantly induced an increase in the productivity of energy firms in China, by around 1% across various model specifications based on the data of listed energy firms from 2006 to 2019. This finding remains robust to alternative measurements of productivity and variations related to time trend, self-selection, outlier values and endogeneity. The effect of the reform is heteroge- neous across different industries, regions, and firms' ownership. Further mechanism anal- ysis suggests that the reform impacted firms' productivity through impeding technological innovation and promoting resource allocation, with the latter effect exceeding the former one. These results provide important policy implications for increasing the productivity of firms in both the energy sector and other energy dependent sectors. •We examine the impacts of China's administrative approval reform on the productivity of energy firms.•The administrative approval reform aims to simplify the approval procedures of projects.•This reform has significantly induced an increase in the productivity of energy firms by around 1%.•The effect of the reform is heterogeneous across different industries, regions, and firms' ownership.•Our finding remains robust to alternative measurements of productivity.